The Top Performing Markets in Emerging Europe

Well-known author and investment consultant Roger Gibson recently hosted a
webcast where he educated investors on the importance of diversifying into
international markets and we believe it is an opportune time to explore new
areas with your portfolio.

Russia may be the first country that comes to mind when you think of Eastern
Europe, but it's the other countries of Emerging Europe, countries such as
Poland, the Czech Republic and Turkey, that have outperformed.

While the S&P 500 Index was only up 3.89 percent as of September 30, Turkey
had risen nearly 31 percent, extending a large lead on other Emerging Europe
countries. The Czech Republic (up 8.19 percent) and Poland (up 11.16 percent)
have also outperformed most emerging markets. Meanwhile, Russian markets have
only gained 4.39 percent.

Even with the good performance of these markets so far this year, Emerging
Europe markets still have attractive valuations. Emerging markets generally
trade at a higher -- many times in the double digits -- price-to-earnings ratio
than the developed markets, but Forbes reports that five of the six cheapest
emerging equity markets in terms of price-to-earnings ratio are from Emerging
Europe. Russia, Hungary, Czech Republic and Turkey are all currently trading
at or below 10 times earnings and Poland comes in at 11 times earnings.

Historically, the German economy has held high importance for Emerging Europe
economies because its relatively wealthy population consumed large amounts
of goods such as cars, dishwashers and refrigerators imported from the region.

That's not the case in today's world. A report out this week showed that German
exports into the Eastern Europe region were up 20 percent during the first
half of the year from the same time last year. In addition, total trade between
Germany, Europe's largest economy, and Emerging Europe totaled $143.6 billion.

This chart from the International Monetary Fund (IMF) shows the strong rebound
in both private consumption and fixed asset investment that Emerging Europe
is currently seeing. Private consumption includes retail sales and orders of
durable goods while fixed investment represents productive assets like power
plants, factories and other infrastructure.

During the depths of the economic crisis, Emerging Europe experienced substantial
contractions in both. This year, private consumption and fixed investment will
contribute to nearly half of the region's GDP and it is expected to contribute
to nearly all of it next year.

The IMF estimates Emerging Europe will see 3.7 percent GDP growth this year
and then dip slightly to 3.1 percent in 2011. But that doesn't tell the full
story.

Poland, which is the only country in the region that avoided recession, grew
by 3.4 percent this year and is forecast for higher GDP growth next year. This
growth is Poland's opportunity to close the gap with other members of the European
Union.

After contracting nearly 5 percent in 2009, Turkey has notched the highest
level of growth for any country in Europe this year -- up almost 8 percent.
Turkey's strength is in its robust banking sector and strong domestic demand.

Things are also looking up for Russia. BCA Research upgraded Russian stocks
this week, based on increases in household income and spending, improved employment
figures and a decrease in household savings rates. Russia also plans to expand
oil production in the near term which should be a positive driver for energy
stocks that are trading 30 percent below global peers.

We're positive on Russia because recent weakness in the U.S. dollar bodes
well for the country's energy and commodity exports.

Recognizing these changes and identifying catalysts for outperformance
is something our experience investing in the region brings us. We were able
to recognize the softness in Russian markets early, allowing us to move larger
portions of the portfolio into the better-performing countries. This week,
Zack's named our Eastern
European Fund (EUROX) in the Top 5 for European Mutual Funds -- click
to here to read what they said.

Tim Steinle, co-manager of the U.S. Global Investors Eastern
European Fund (EUROX), contributed to this commentary. Tim and Evan Smith
have just returned from Russia and Turkey, obtaining that tacit knowledge
you can only gain from being on-the-ground.

Please consider carefully a fund's investment objectives,
risks, charges and expenses. For this and other important information, obtain
a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS
(1-800-873-8637). Read it carefully before investing. Distributed by U.S.
Global Brokerage, Inc.

Foreign and emerging market investing involves special risks
such as currency fluctuation and less public disclosure, as well as economic
and political risk.

By investing in a specific geographic region, a regional fund's
returns and share price may be more volatile than those of a less concentrated
portfolio.

The Eastern European Fund invests more than 25% of its investments
in companies principally engaged in the oil & gas or banking industries.
The risk of concentrating investments in this group of industries will make
the fund more susceptible to risk in these industries than funds which do not
concentrate their investments in an industry and may make the fund's performance
more volatile.

The S&P 500 Stock Index is a widely recognized capitalization-weighted
index of 500 common stock prices in U.S. companies. All opinions expressed
and data provided are subject to change without notice. Some of these opinions
may not be appropriate to every investor. The Istanbul Stock Exchange National
100 Index (XU100) is a capitalization-weighted index composed of National Market
companies except investment trusts. The MICEX Index is the real-time cap-weighted
Russian composite index. It comprises 30 most liquid stocks of Russian largest
and most developed companies from 10 main economy sectors. The MICEX Index
was launched on September 22, 1997, base value 100. The MICEX Index is calculated
and disseminated by the MICEX Stock Exchange, the main Russian stock exchange.
The WSE-WIG Index is a total return index which includes dividends and preemptive
rights (subscription rights). The index includes all companies listed on the
main market, excluding foreign companies and investment funds. The Budapest
Stock Exchange Index is a capitalization-weighted index adjusted for free float.
The index tracks the daily price-only performance of large, actively traded
shares on the Budapest Stock Exchange. The Prague Stock Exchange Index is the
official index of the Prague Stock Exchange.

Frank Holmes is CEO and chief investment officer of U.S. Global Investors,
Inc., which manages a diversified family of mutual funds and hedge funds specializing
in natural resources, emerging markets and infrastructure.

The company's funds have earned more than two dozen Lipper Fund Awards and
certificates since 2000. The Global Resources Fund (PSPFX) was Lipper's top-performing
global natural resources fund in 2010. In 2009, the World Precious Minerals
Fund (UNWPX) was Lipper's top-performing gold fund, the second time in four
years for that achievement. In addition, both funds received 2007 and 2008
Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a
leading publication for the global resources industry, and he is co-author
of "The Goldwatcher: Demystifying Gold Investing."

He is also an advisor to the International Crisis Group, which works to resolve
global conflict, and the William J. Clinton Foundation on sustainable development
in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator
on financial television. He has been profiled by Fortune, Barron's, The Financial
Times and other publications.

Please consider carefully a fund's investment objectives, risks, charges and
expenses. For this and other important information, obtain a fund prospectus
by visiting www.usfunds.com or by calling
1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed
by U.S. Global Brokerage, Inc.